By Boluwatife Oshadiya | May 29, 2026
Key Points
- Nigeria’s economy grew by 3.89% in Q1 2026, driven largely by non-oil sectors including telecoms, finance, manufacturing, and construction
- Listed banks and cement firms posted strong revenue growth and sharp market-cap gains during the period
- Analysts warn that stock market gains are increasingly being driven by investor expectations and liquidity rather than real economic expansion
Main Story
Nigeria’s economy expanded by 3.89% year-on-year in the first quarter of 2026, according to new data released by the National Bureau of Statistics (NBS), reflecting stronger growth than the 3.13% recorded in Q1 2025 and marginally above the country’s 3.87% full-year growth rate for 2025.
The growth was driven primarily by the non-oil sector, with strong performances recorded in telecommunications, financial services, manufacturing, and construction. Information and communication activities grew by 10.98%, financial and insurance services expanded by 8.54%, while construction rose by 6.38%. Manufacturing recorded 3.29% growth, supported by cement production, which grew by 11.53%.
For investors on the Nigerian Exchange (NGX), however, the key issue is not GDP growth itself but whether that expansion is translating into stronger corporate earnings, sustainable shareholder returns, and long-term market value creation.
The banking sector emerged as one of the strongest beneficiaries of the economic expansion. Ten listed banks posted combined gross earnings of N6.84 trillion in Q1 2026, up 10.79% from N6.18 trillion in the corresponding period of 2025.
Market valuation also surged sharply. The combined market capitalisation of 12 listed banks rose from N11.02 trillion in March 2025 to N25.68 trillion by May 2026, representing a 133.2% increase within 14 months.
However, profit growth remained comparatively weaker. Combined profit after tax rose by 6.9% to N1.62 trillion, reflecting pressure from higher operating expenses, impairment charges, and funding costs.
The cement sector also delivered strong numbers. Dangote Cement, BUA Cement, and Lafarge Africa recorded combined revenue of N1.89 trillion in Q1 2026, compared with N1.53 trillion a year earlier, representing 23.08% growth.
Dangote Cement’s production volume rose by 10.1% to 7.21 million tonnes, while sales volume increased by 13.7% to 7.47 million tonnes during the quarter. Investors also benefited from stronger dividend payouts across the sector, with Lafarge Africa and BUA Cement both raising dividends to N10 per share, while Dangote Cement increased its dividend to N45 per share.
The oil and gas sector, however, recorded slower momentum. Crude petroleum and natural gas grew by 2.57% in Q1 2026. Listed energy firms including Seplat, Eterna, and TotalEnergies posted combined revenue of N1.4 trillion, lower than the N1.5 trillion recorded in Q1 2025.
Seplat attributed part of the decline to weaker production volumes, as crude and condensate liftings fell by 13% to 8.7 million barrels, while gas sales declined by 12% to 12.8 billion standard cubic feet.
What’s Being Said
“Nigeria’s GDP growth remains encouraging, particularly because it reflects resilience in key non-oil sectors despite inflationary and monetary pressures,” said a Lagos-based investment analyst at Vetiva Capital.
“The banking sector continues to benefit from elevated interest rates and investment in government securities, but that may not necessarily translate into stronger private-sector credit expansion,” said Ayodeji Ebo, Managing Director, Optimus by Afrinvest.
“The equity market is increasingly pricing future reforms, liquidity conditions, and long-term investor optimism rather than current GDP figures alone,” said Johnson Chukwu, Group Managing Director, Cowry Asset Management.
What’s Next
- Investors are expected to closely monitor Q2 2026 corporate earnings for signs of stronger real-sector demand and profit sustainability
- The Central Bank of Nigeria’s next Monetary Policy Committee meeting will likely influence banking-sector profitability and equity market liquidity
- Analysts expect infrastructure spending and ongoing economic reforms to determine whether current GDP growth can be sustained through the second half of 2026
Bottom Line
The Bottom Line: Nigeria’s Q1 2026 GDP growth confirms that the economy remains resilient despite persistent macroeconomic pressures. However, the sharp rally in Nigerian equities suggests investors are betting more on future reforms, liquidity conditions, and earnings expectations than on current economic growth alone.
